– Niyas Valiyathodi
Introduction
Arbitration revolves around the agreement between the parties. The arbitration process commences from the agreement between the parties and ends with an arbitration award passed by the arbitration tribunal. The Arbitration and Conciliation Act, 1996 (hereby referred to as “the Act”) contains several measures to protect and safeguard the interest of the parties in case of interim measures. Certain sections in the Act are specifically mentioned to ensure one party’s interest over another. A party can approach the court for interim measures under Section 9 of the Act and a party can approach the arbitral tribunal for interim measures under Section 17 of the Act.
Section 9: interim relief by a court
A party can move an application under Section 9 of the Act with the court for interim relief before the arbitration proceedings or after the award is passed but before it gets imposed.
The facts that the courts consider before granting interim reliefs under Section 9 of the act:
- The party to demonstrate the existence of a prima facie case in its favour
- The balance of convenience is in favour of granting the interim measures that are being requested.
- Demonstrate that if the request of interim measure is not granted then irreparable injury would be incurred by the party.
The objective of Section 9 of the Act is to protect the dispute’s subject matter during arbitral proceedings as held in [1]Dirk India v. Maharashtra State Electricity Generation Company Limited. This case was under Section 9 of the Act and at the stage of a challenge under Section 34 of the Act to an award. The award was against the Appellant before the Court. Before the court, the Appellant asked for relief under Section 9 of the Act in its challenge to the award. The Division Bench held that there was no warrant for allowing such application. The object and purpose of Section 9 was to provide an interim measure that would protect the subject matter of arbitral proceedings whether before or during the continuance of the arbitration proceedings or, even thereafter, upon conclusion of the proceedings until the award was enforced. The Division Bench held that once the award had been made. A claim had been rejected, as in the present case, even a successful challenge to the award under Section 34 would not result in an order decreeing the claim and, in the premises, in such a case there would be no occasion to take recourse to Section 9. Today, it is the Respondents, who may alone enforce the award. Insofar the Petitioner is concerned, it is the judgment debtor before the Court and as a judgment debtor, under the law stated by this Court in Dirk India, it cannot possibly apply for interim relief in aid of what it lost before the arbitral tribunal.
Sub-section (2) and Sub-section (3) of Section 9 were added to the act in the 2015 amendment. The intention behind incorporating both elements is to guarantee that interim measures outlined in Section 9 are not employed without necessity and that the provisions within this section are not unduly extended by a party that may have obtained an order for interim measures under Section 9 while delaying the initiation of the actual arbitral proceedings to exploit the opportunity presented by the interim measure. Consequently, referring to Sub-Section (2) of Section 9, stipulates that if a court has granted an order for interim measures of protection under Sub-Section (1) before the commencement of arbitral proceedings, the arbitration process must be initiated within 90 days from the date of that order.
The sub-section (3) plays as an exception where the act has stated that “the court shall not entertain” which means once the arbitration tribunal has established or after the award has been passed the court shall not entertain applications under Section 9 of the act unless the remedy provided in under section 17 is ineffective.
Interim relief can be provided under Section 9 in the following circumstances:
- Before the Arbitral Tribunal is established,
- After the Arbitral Award is issued but before it is enforced, or
- When the remedy available under Section 17 becomes ineffective.
Section 17: Interim relief given by Arbitral Tribunal
A party can move an application under Section 17 for an interim relief under the arbitral tribunal. Under section 17 an interim relief is provided:
- After the arbitral tribunal has established and
- Before the arbitral tribunal has issued an award.
Before the enactment of the 2015 Amendment, arbitral tribunals possessed extensive authority to issue various forms of interim measures of protection. In contrast, the 2015 Amendment curtailed these powers and specified the circumstances and procedures for exercising authority under Section 17 of the Act.
All orders made under Section 17 of the Act are subject to appeal solely under Section 37 of the Act. The Amendment Act of 2015, which previously left this matter unclear, has now established that any order rendered by an arbitral tribunal under Section 17 is regarded as a court order for all intents and purposes, and it is enforced in the same manner as a court order. However, it is enforceable under the Civil Procedure Code, 1908, in the same way, that a court orders the same was reiterated in the case[2] Alka Chandewar v Shamshul Ishrar Khan that by the addition of sub-section (2) to Section 17, the elaborate procedure of an arbitral tribunal having to apply every time to the High Court for contempt of its orders would no longer be necessary.
The interplay between Section 17 and Section 9
Section 9 and Section 17 of the Act do overlap each other, however, the distinction between them is crucial. The Hon’ble Supreme Court in Arcelor Mittal Nippon Steel (India) Ltd. V. Essar Bulk Terminal Ltd[3] held that once an arbitral tribunal has been constituted, the court shall not entertain an application for interim measures under Section 9(1) unless the court finds the existence of the circumstances that render the remedy provided under Section 17 ineffective.
In the case of Avantha Holdings Limited vs. Vistra ITCL India Limited[4], the Delhi High Court emphasized the necessity for the court to remain acutely aware of the powers conferred upon the arbitrator or arbitral tribunal by Section 17 of the Act when exercising its authority under Section 9. A comparative analysis of Sections 9 and 17 reveals that their language is nearly identical. The “interim measures” that the arbitral tribunal is authorized to impose under Section 17 correspond directly to those that the Court can issue under Section 9. Consequently, sub-section (3) of Section 9 restricts the Court from granting interim measures following the establishment of the arbitral tribunal, unless the Court determines that specific circumstances exist which would render the remedy under Section 17 ineffective.
Conclusion
Section 9 holds significant importance and acts as a crucial remedy within arbitral proceedings. While courts are making efforts to limit the application of Section 9 once the arbitral tribunal has been constituted, it may take a considerable period before the remedy provided under Section 17 is fully operational. In India, a substantial conflict persists between the judiciary and arbitral tribunals. The recent amendments have elucidated the extent of authority granted to both courts and arbitral tribunals under Sections 9 and 17, respectively
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[1] Dirk India v. Maharashtra State Electricity Generation Company Limited 2013 (7) B.C.R. 493
[2] Alka Chandewar v Shamshul Ishrar Khan (2017) INSC 502
[3] Arcelor Mittal Nippon Steel (India) Ltd. V. Essar Bulk terminal Ltd (2021 SCC OnLine SC 718)
[4] Avantha Holdings Limited vs. Vistra ITCL India Limited MANU/DE/1548/2020.